Circular economy strategies for Lao PDR A metabolic approach to redefine resource efficient and low-carbon development Circular economy strategies for Lao PDR A metabolic approach to redefine resource efficient and low-carbon development Colophon Contact information Acknowledgements Seumkham Thoummavongsa This study beneftted from valuable assistance with data collection, in- Deputy Director General sightful stakeholder views and expert opinions, including from: Seumkham Institute of Renewable Energy Promotion Thoummavongsa, Xaysavanh Latthachack, Phouttavanh Phommachanh, Ministry of Energy and Mines Lao PDR Somephet Philadeng (Institute for Renewable Energy Promotion), Bounthee [email protected] Saythongvanh, Heuan Chanphana, Vilaivanh Liengsitham (Ministry of Tel. (856-21) 413-012/413-013 Natural Resources and Environment), Phonepaseth Krodouangdy (Ministry of Planning and Investment), Phongphackdy Sivilay, Sonethavy Bounvilai Alexandra Soezer (Ministry of Industry and Commerce), Phoudone Meksavanh (Vientiane [email protected] Urban Development and Administration Authority), Margaret Jones Williams, Balasubramaniam Murali, Chitlatda Keomuongchanh, Somlith Technical Oversight and Guidance Khounpaseuth, Jonas Aechtner (United Nations Development Programme), Janet Salem, Henrik Jakobsen (United Nations Environment), Jaeseung Lee Alexandra Soezer, Climate Change Technical Advisor, Low Emission (Global Green Growth Institute), Thongphet Phonsavath (Cleaner Production Capacity Building Programme Centre Lao PDR), Sisavanh Phanouvong, David Salter (Asian Development Bank), Paul Simcock (Geomatic Services, European Chamber of Commerce Lead author and Industry in Lao PDR), Marcel Crul (Frisian Design Factory, Delft Technical University), Christiaan Bolck, Rene Wijffels (Wageningen Jelmer Hoogzaad (Shifting Paradigms) University), Bastiaan Teune (SNV Netherlands Development Organisation), Jennifer Smith, Thomas Hesketh (Emerging Markets Consultancy), Chris Smithies (Earth Systems), Bamshad Houshyani (Greenovation), Main partners Robert O’Sullivan (Winrock International), Paul Rogers (Ecotourism Instituo Oikos), Sebastian Koch (Deutsche Gesellschaft für Internationale Bas Driessen, Yara Alnashawati, Eric Frijters (FABRIC) Zusammenarbeit), Eiji Egashira (Japan International Cooperation Agency), Matthieu Bardout, Shyaam Ramkumar, Marc de Wit Andy Schroeter (Sunlabob). (Circle Economy) Disclaimer: The views expressed in this publication do not necessarily Editor refect the views of the United Nations Development Programme or its Executive Board. Georgina Wilde September 2017 Design Nathanaël Reuling At www.undp.org you can order a full colour print-on-demand version. Contents Colophon 2 Step 2: Mapping priority sectors, industries and resources 39 Foreword 7 2.1 Selected maps 41 Summary 9 2.2 Resource analysis 37 2.3 Agriculture analysis 44 Thinking in flows and stocks 13 2.4 Energy analysis 46 2.5 Tourism analysis 48 Combining resource efficiency with low-carbon development 14 Circular future 51 The socio-economic metabolism 15 Circular economy strategies 16 Step 3: Circular economy strategies 53 Circularity as development paradigm 17 Stainable development and 3.1 Circular manufacturing, textiles climate action 19 and waste management: cores, Four steps from the socio-metabolic recycled fibres and bacteria 54 profile to circularity 19 3.2 Circular construction materials from forests: circular resorts to Development opportunities and advance ecotourism 58 challenges in Lao PDR 23 3.3 Circular agriculture, mining: algae farming to clean water in Step 1: The socio-metabolic profile 25 hydropower reservoirs 61 3.4 Overview of technologies and 1.1 Resource-driven growth 26 benefits per sector 65 1.2 Resource demand from 3.5 Contribution to achieving SDGs 65 neighbouring countries 28 3.6 International cooperation on 1.3 International commitments climate mitigation supporting and economic integration 29 circularity 65 1.4 Sector profiles 30 Annex 1: List of tables and figures 70 Circular economy strategies for Lao PDR Foreword 4 Foreword The adoption of the Paris Agreement The central location of Lao PDR, its in 2015 marks not only an historic hydropower resources, a solid agricultural milestone for the global effort to and forestry basis for developing a bio- combat climate change but also sends an based economy, the potential to expand important signal for accelerated climate ecotourism, its modest wages and the action and a dramatic transformation of integration into the ASEAN Community economies as we know them. (Association of South East Asian Nations) In the strongest ever collective are all major opportunities. spirit, 195 countries came forward with The Institute of Renewable Energy Nationally Determined Contributions Promotion under the Ministry of Energy to outline targets for cutting green- and Mines, UNDP and Shifting Paradigms house gas emissions. These national developed a study on ‘Circular Economy contribution targets culminated into the Strategies for Lao PDR’ which analyses Paris Agreement which set the highly the metabolism of Lao PDR to improve ambitious, but vital, global goal to limit resource efficiency and asset use. For temperature increases to well below 2°C the study, a step-wise approach has been and transition to a zero-carbon economy adopted which goes from priority setting by the end of the century. based on national development ambitions Reaching this ambitious goal will, and the metabolic profile of the country, however, require achieving progressively to defining circular economy strategies. deeper cuts in greenhouse gas emissions. Priority setting and strategy formulation Since these emissions are closely related were guided by an ambition to optimise to resource use, circular economy strat- resource efficiency and reduce greenhouse egies can guide us onto a low-carbon gas emissions, seek cross-sectoral impacts development pathway. and ability to inspire circular innovations Therefore, Lao PDR developed across the Laotian economy. a vision of a circular future which The government of Lao PDR has combines economic development with embraced this approach to redefine a safeguarding the country’s unique nature development perspective for the country. and culture. This requires a systems It looks forward to continuing its effort to approach which looks beyond isolated further decouple economic development, challenges or attempts to optimise from the expansion of the national individual installations. resource and carbon footprint. Circular economy strategies for Lao PDR Summary 6 Summary Lao PDR is strategically located in the heart of Southeast Asia and a vital organ in the regional economic tissue. It supplies its own industries and consumers with food and resources, while also exporting large volumes of crucial supplies to surrounding countries. The country has an opportunity to leapfrog into a circular future, where economic activities and resource use are regenerative by design and safeguard the natural and cultural beauty which are uniQue to the country. Analyzing the flows, conversions and stocks of materials and energy which constitute the metabolism of Lao PDR, bring the most promising circular economy strategies to the surface. The analytical approach looks at Lao PDR as a system and combines resource efficiency with low-carbon development. These two development goals go well together, since 67 per cent of global greenhouse gas emissions are related to materials management. The opportunities build on circular economy strategies, which reduce the input of raw materials, improve the use of existing assets and reduce the output of harmful waste, including green- house gasses. For developing countries, this approach represents a uniQue opportunity to redefine development and growth, through the lens of metabolic efficiency. For Lao PDR it is an opportunity to skip the catching-up phase and leapfrog into a postindustrial society, where the living organism, rather than the machine from the industrial age, is the main source of inspiration. 7 Circular economy strategies for Lao PDR Summary Development opportunities and challenges 1. A regional recycling and remanu- Between 1990 and 2015 the domestic facturing hub: Lao PDR can position extraction of resources in Lao PDR itself as a recycling and remanufac- increased from 10 to 71 million tons per turing hub in which material cycles year. Increased extraction and exports of are closed. The country can take full wood, metal ores and refined copper were advantage of its location on major the main drivers of economic growth. This regional transport arteries like the is a short-term growth strategy supresses newly built transit railroads and the the growth potential of non-extractive national industries. Mekong river. It could function as a The central location of Lao PDR in resource hub, through which resources between the large economies of southeast can be renewed and redistributed. Asia, and on existing and planned international transport arteries, is a major For example, by importing end-of-life opportunity. Other competitive advantages motorcycles and cores, Lao PDR can are its access to hydropower resources, replace the region’s need to import a solid agricultural and forestry basis for motorcycle parts, produced from newly developing a bio-based economy and its extracted raw materials. Similarly, the modest wages. The critical development import of synthetic materials can be challenges for Lao PDR are the heavy substituted with local, bio-based